The market has been following a very bullish script for the past few weeks, doing just about everything it “needed” to do -- our Cabot Tides have turned positive, as has our Two-Second Indicator, while our Aggression Index tells us growth-ier names are in favor. And more important, individual names are now breaking out (not failing) and following through on the upside. Obviously, the market has come a long way in a short time, and we are starting to see a few strong names wobble a bit, so we’re not going whole hog right here, but we are continuing with our plan of steadily putting money to work -- tonight, we’re filling out our position in one current holding and starting a new half-sized position in a new name. That should leave us with around 40% in cash.

Elsewhere in tonight’s issue, we go over all our new stocks and our watch list, write about one strong sector outside of growth and dive into some solid longer-term positive signs for the market as a whole.

Yesterday’s Federal Reserve meeting and Tuesday’s consumer price index data showed inflation and interest rate hikes are pausing but remains well above what markets would like.

Overall inflation is cooling in large part because energy prices have fallen sharply — a huge relief for consumers. But the core gauge, which excludes energy and food prices, shows inflation is still too high.

Nevertheless, investors welcomed the news as it spurred markets and confidence that the market performance might advance beyond big tech and the artificial intelligence (AI) story.

Despite all the current issues, the market is doing gangbusters.

The S&P 500 is up over 12% YTD. And the year isn’t even half over. The index has also rallied more than 20% from the bear market low in October. That’s the definition of a bull market.

But things aren’t as rosy as they seem. This is the thinnest rally I’ve ever seen. Just ten stocks account for the entire YTD rise in the S&P 500 index. The other 490 stocks have collectively gone nowhere.

Today, I’m recommending a biotech that is well capitalized and has an approved drug that is growing 100%.

Key points about the company:

• Over $300MM of cash on its balance sheet
• Key drug to hit $500MM in annual sales in 2023
• Obscure tax law points to an acquisition offer in November or December.

All the details are inside this month’s Issue. Enjoy!

Ahead of a big week for the market, the S&P 500, Dow and Nasdaq all rose marginally last week.

If you had written a script of what you wanted to see from the market a few weeks back, most of that has come true; simply put, the evidence continues to improve. Now, of course, things aren’t perfect—we’re seeing a bit of rotation out there that could continue to play out, and there are some potential leaders that are getting wobbly; throw in the fact people are feeling more comfortable and we’re not advising anyone to go hog wild. But with the evidence continuing to impress, we’ll bump our Market Monitor up another notch to a level 7.

This week’s list is heavy on medical and infrastructure-type names, with a smattering of other areas, too. Our Top Pick won’t be the fastest horse but should be a straight-on play on what is looking like a building, construction and infrastructure boom.

We’ve entered a new bull market, and boy are those fun words to type!

Sure, the rally has been thin, led by seven or eight mega-cap tech stocks and, more recently, artificial intelligence. And yes, with inflation and another Fed meeting on the docket this week, a huge bucket of cold water could be thrown in the market’s face in the next 48 hours. But as of this moment, stocks are the healthiest they’ve been since 2021, and that means we’re keeping our foot on the growth pedal. So today we’re adding another potential technology leader that’s a very recent recommendation from Mike Cintolo in Cabot Growth Investor.

Nothing new here. I’m going to keep it fairly short this week. We are firmly in the doldrums of earnings season and will be for the next several weeks.

Of course, what might seem like a slow crawl to the next earnings season, it’s only a month away. JPMorgan (JPM) and Wells Fargo (WFC) are just a couple of the notable names that report earnings July 14.

The June 16, 2023 expiration cycle is finally upon us and we have several positions due to expire. However, since we are using an income wheel approach, we will remain mechanical and allow our KO short put, GDX short and PFE 40 covered call to carry through expiration. Unless any drastic price action occurs prior to expiration, I will look to sell more options premium in each of the aforementioned stocks at the onset of next week.

Other than handling a few trades at expiration, nothing has changed: I continue to search for positions to add to the mix. I would love to see a pullback, preferably a close of the numerous price gaps below in the major indices, before placing a trade.

Before we get started, our next Live Analyst Briefing with Q&A is scheduled for June 15, 2023, at 12 p.m. ET, where we will be discussing the options market, giving a detailed look at open positions, strategies used, and will have a follow-up with live questions and answers.

The market sits at a pivotal juncture with volatility sitting at the lowest levels in a few years. The week ahead is littered with market-moving events. But Wednesday is the day that offers up the most intriguing and potentially market-moving event. Wednesday at 2:00 ET we have the Fed’s rate decision, FOMC statement, and economic projections followed by Chairman Jerome Powell speaking at 2:30. I would expect to see price action vacillate widely immediately after the event. I’ll be paying close attention to see how the VIX reacts prior to and after the statement.

With the market rallying as of late, the All-Weather portfolio is now up 6.0%, with the Vanguard Total Stock Market ETF (VTI) and SPDR GLD Shares ETF (GLD) doing the heavy lifting, up 19.3% and 6.5%, respectively.


Both bond funds (TLT and IEF) and the commodity fund (DBC) continue to lag behind, but that is the yin-yang protective nature of the All-Weather portfolio just doing its job.



Only one of our positions has been rolled so far. We still have four June 16, 2023 calls due to expire this week, As a result, expect to see quite a few alerts come through early in the week as we roll our positions and sell more premium going out 30 to 60 days.

Ahead of a big week for the market, the S&P 500, Dow and Nasdaq all rose marginally last week.

The volatility continues but we’ve seen most of our stocks hold above previous lows (so far). The S&P 600 Small Cap Index is also holding above its lows from last week.

The markets continue to be challenging to say the least, with the S&P 500 off 18% so far this year, but like everyone I see some amazing companies posting strong numbers being pulled down over a blend of macro issues. These range from inflation and interest rates to the slowdown in China and conflict in Ukraine. Current Explorer recommendations still managed to outperform the market, with some up and most holding their ground in the past week. SQM (SQM) of Chile reported first-quarter profits up 10X over 2021.

The market has rallied strongly off last week’s lows. Buy I’m not buying into it. Stocks are already floundering badly again today.
The S&P 500 came to within close to 1% of a bear market last week, down 20% from the high on a closing basis before several up days and a better than 4% rally off the low. The index has posted six consecutive weeks of decline, the longest such streak in more than a decade.

The market has improved from the heavy selling of last week. But I’m not buying this rally just yet.

At the low point of the selling last week, the S&P 500 was down about 19% from the high. That was dangerously close to a bear market, down 20% from the high on a closing basis. A bear market is an important psychological level that would likely prompt further selling if crossed. And we came right up to the cusp.

The past couple of weeks in the market have not been fun.

The only fun thing about the last few weeks has been the weather.



We got into the 80s last week near Boston, and this weekend temperatures are likely to hit 90 degrees!



I even got to play my first round of golf and didn’t play too badly.

The financial press is full of chatter about what to do in the current market downturn. Common themes include timing the bottom (which usually includes the opposing suggestions to not time the markets followed by suggestions on how to do it), buying on the dips (highlighting the appeal vs. the danger that this is a secular bear market), and buying stocks that have been beaten down by 50% or more year-to-date. There are other themes, but these are the ones I see most often.

Despite the broad market downturn, all our portfolios are currently positioned to withstand the gyrations.

The S&P 500 rebounded 2.39% Friday while the Nasdaq jumped 3.82%. That kind of strong action clearly indicates that institutions such as hedge funds or mutual funds are scooping up shares.



The reason doesn’t matter, so it’s best not to try to explain the action away with theories such as short covering or an equity-buying spree in response to a (perhaps) peak in Treasury yields. It can be mentally entertaining to speculate or overthink these possibilities, but ultimately, it’s all about watching the charts.

You’ve often heard me say that gold’s biggest gains are normally made when investors are worried about either the stock market, the economy or the geopolitical outlook. Right now, all three of those outlooks are in serious question. Why, then, has gold failed to respond to the heightened fears?

This week’s Friday Update includes our comments on earnings reports from four companies and more color on our initial review of another company that reported last week. If Hollywood makes a movie about this market cycle, perhaps it will be called “Revenge of the Moat.”

There is no shortage of data pointing to just how bad this market is. With year-to-date (YTD) performance for the S&P 500, Nasdaq and S&P 600 of -17%, -27% and -18%, respectively, this is one of the worst YTD starts in decades.

The market is down again today, though we do see many stocks and some growth funds putting up a fight. As of 1:30 ET, the Dow is down 333 points and the Nasdaq is down 82 points, though growth funds are up in the 1% to 4% range.

It looked grim for a while there. And we’re certainly not out of the woods yet. But hope has stopped the market decline, at least for now.



The broader S&P 500 index closed earlier this week at a YTD low, down over 16% for the year and over 17% from the high. It is dangerously close to the 20% bear market level which would officially end the bull market that started in March of 2020. That would be an important psychological level that would likely prompt more selling.

JOANN (JOAN) reported Q3 fiscal 2022 results after the close yesterday. This quarter was for the period ending on October 30. Revenue missed expectations slightly but adjusted EBITDA and adjusted EPS surpassed expectations. The high-level take away is that supply-chain challenges persist (no surprise there) but JOANN is doing what it can and appears to have the pricing power necessary to maintain a strong underlying business and pursue the growth strategy it has embarked upon to extend its lead in the arts and crafts retail market.

Suffice to say it’s been a tough week. As we head into a weekend that can’t come quickly enough, the main market indices are down over 2.5% and many, many stocks are 20%, 30% or 40% off their highs (some are better, some are worse).

This medical device company—despite COVID-19 headwinds—is expected to grow by more than 100% annually over the next five years.

Shares of Fiverr (FVRR) continue to slide, despite a beat-and-raise Q3 report and the threat of Omicron, which in theory should be good for some work-from-home (WFH) stocks.

Wolfspeed (WOLF) closed at 104.60 Thursday, below our recommended stop-loss level of 107. We recommend selling today.

This semiconductor company beat analysts’ earnings estimates by $0.13 last quarter.

More bad news on the virus front caused a huge reversal yesterday, with the Dow down 462 points, the Nasdaq off another 284 and growth stocks faring even worse.

Array Technologies (ARRY) triggered our sell-stop with its close at 17.65 Wednesday, and we recommend selling today.

I just wanted to drop a quick note about what we’re seeing in our portfolio; other than that the high-level action is mostly in line with the broad market (i.e., across the board weak).

The broad U.S. equity market experienced another “volatility event” this week, which was blamed on Covid variant worries and concerns that the Fed might begin tapering sooner than expected.

I just wanted to drop a quick note about what we’re seeing in our portfolio; other than that the high-level action is mostly in line with the broad market (i.e., across the board weak).

Coverage of the shares of this tech company were recently initiated at RBC Capital with an ‘Outperform’ rating.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.